In New York, especially in congested Manhattan, finding a parking space sometimes feels like trying to win the lottery. Little wonder then that Mayor Michael Bloomberg's announcement that he is going to reduce the number of special parking permits issued to city employees has sparked heated debate.

Supporters of the plan see it as a way to improve traffic conditions and air quality, and as a step towards a fairer system. But permit holders warned the mayor that he could hurt the city by causing key employees to look elsewhere for jobs.

The permits allow holders to park at meters for free for up to three hours and also provide access to some restricted spaces. The system is designed to let an inspector use the permit when visiting a restaurant for a hygiene check, or allow an employee to check excessive noise from a bar. But it seems many are using them to park all day while they go to their offices.

According to the New York Post, 149 government entities issued parking permits to their employees last year. The city isn't certain how many there are in total, although it guesses 75,000. Transportation Alternatives, an advocacy group that supports Mr Bloomberg's proposed crackdown, insists the real number is double that. Its figure includes those issued by unauthorised unions, forgeries, and those that have expired but are overlooked by the authorities.

It says the permits contribute a lot to the city's gridlock. Free parking encourages 26 per cent of city government employees to drive to work, almost double the rate for private sector workers. The group also estimates the city could make an additional US$46 million in revenue a year from meters by revoking the permits.

'It's not just the number of people parking with permits but the number of people parking illegally, whether on the sidewalk, blocking bus stops, blocking fire hydrants. That's the biggest problem,' said Wiley Norvell, the spokesman for Transportation Alternatives.

One of the areas that suffers most from congestion and the impact of the permits is Chinatown, located close to City Hall, police headquarters, various courts, and other municipal buildings. The argument over permits has been going on for at least 20 years in the neighbourhood. The problem worsened after the September 11 attacks when some major streets in Chinatown were closed to the public and only government workers were allowed to drive through.

'What was worse before got really bad, because no civilian cars were allowed so the permit holders could park anywhere and they never left,' said Jan Lee, an antique shop owner in Chinatown.

Mr Lee said the narrow street his shop was on was sometimes a sea of cars with permits, which deterred tourist traffic and even forced a funeral home to carry coffins over the tops of the cars.

Mr Bloomberg's plan requires city agencies to cut the number of permits by 20 per cent. The police department and department of transportation will be in charge of issuing them. A special unit within the police department is being set up to crack down on abuse.

Resistance to the proposal has been immediate, especially from police and public school teachers. Those groups see the permit as a perk to keep them working in the city rather than moving to better-paying districts elsewhere. On NYPD Rant, an online forum for police officers, there were threats from some to leave the city or to issue more traffic tickets in retaliation.

Randi Weingarten, the president of the United Federation of Teachers, sent a letter to the mayor saying the action shouldn't be at the expense of teachers 'whose jobs are hard enough already'.

Even supporters of the plan wonder about the police enforcing a system they are thought to abuse.

'The plan sounds good on the surface but it is still the police being in charge of the police. That's the system we have now and it doesn't work,' said Mr Lee, who was once arrested for taking photographs of illegally parked police cars.